Could Price Regulation Be Passed in the Extremist Culture of Congress?

Near the end of his highly accurate indictment of the American Healthcare Industry, Mr. Steven Brill concludes (1) it’s unlikely that our centuries-old mechanism of paying for American healthcare (“fee-for-service”) could be retired (I hope he’s wrong), and (2) the only plausible replacement is a “single-payor system” (wrong), which is politically untenable anyway (he’s got that part right).

Thus, Mr. Brill’s logic goes, we are left with only ONE path forward for reforming how we pay for our healthcare: price controls.

Well, I can’t imagine the creation of bipartisan legislation to regulate anything in our extremist political climate, much less private healthcare prices. It’s true CMS has effectively regulated prices for government-sponsored healthcare of seniors (Medicare Part A & B), but (1) LOTS of waste exists in those expenses too (see my prior posts, Dr. Atul Gawande’s June 2009 New Yorker article, and other sources), (2) fee-for-service Medicare cost trends are as unsustainable as commercial healthcare insurance (see fiscal cliff, sequestration, etc) and (3) my industry has always been effective at thwarting price reductions – we simply raise volume of services to a degree greater than the reduction in unit prices. So what then?

There exists another choice. One that rewards continuous improvement and innovation in clinical quality and efficiency, rather than the waste and fractured care of fee-for-service. Its known as pre-payment of medical care, and its been in existence for nearly 70 years (Kaiser Permanente). Or if you’d prefer, see the highly successful Medicare Advantage Program (Medicare Part C), inside of KP and outside of KP. We’ve routinely got the highest quality (see annual Medicare STARS rankings), the greatest care-efficiency (see Aon-Hewitt’s annual HVI report), and best customer satisfaction year after year (see JD Power and Associates Annual Award in the markets in which we operate).

You might be sick of me saying it by now, but here goes … America’s fee-for-service mechanism of paying for healthcare is the root cause of our country’s cost and quality problem. And at KP, we know how to fix it.

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